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Insights into Editorial: Model Agricultural Land Leasing Act, 2016: Some Observations

 

 


Insights into Editorial: Model Agricultural Land Leasing Act, 2016: Some Observations


 

 

Summary:

An expert panel appointed by NITI Aayog submitted its recommendations in April 2016 to create a model law to formalise leasing of agricultural land.

  • Besides, reviewing existing agricultural tenancy laws of states, the expert committee had to suggest appropriate amendments with a view to legalise and liberalise land leasing and, more importantly, to prepare a model act.
  • After consultations with states, farmer associations and civil societies, in the final report, the committee has provided a Model Agricultural Land Leasing Act.
  • Currently, land ownership in India is recognised through the Registration Act of 1908. But on strictly technical terms, this Act only records the selling and buying of lands and doesn’t indicate ownership. As of now, most state governments have either legally banned or imposed various restrictions on agricultural land leasing.
Model Agricultural Land Leasing Act
The Hindu

Why a law in this regard is necessary?

  • Absence of a sound institutional framework facilitating land leasing had been viewed as a major obstacle for private investment in agriculture resulting in poor productivity.
  • Due to lack of any legal framework for leasing, the informal tenants of agricultural land have, in many parts of the country, been deprived access to institutional credit, disaster relief, and other support services.
  • The situation, where beneficiaries of agricultural support services have been the land-owners and not the actual tillers, has fuelled problems of farmer suicides, default on agricultural loans among others.
  • Also, agricultural land leasing has hitherto been informal due to legal restrictions imposed by some states, and these restrictions have affected agricultural productivity growth.
  • Besides, tenancy laws differ from state to state. Laws in some states are generally very restrictive in the sense that they had almost prohibited agricultural tenancy. Such restrictive tenancy laws of states had adversely affected agricultural efficiency, equity, occupational diversification, and rapid rural transformation.

 

Main features of the proposed model Agricultural Land Leasing Act, 2016:

  • Legalise land leasing, which will promote agricultural efficiency, equity, poverty reduction, agriculture productivity and rapid rural change.
  • This is to ensure complete security of land ownership right for land owners and security of tenure for tenants for the agreed lease period.
  • It will remove the clause of adverse possession of land in the land laws of various states as it interferes with free functioning of the land lease market.
  • Allow automatic resumption of land after the agreed lease period without requiring any minimum area of land to be left with the tenant even after termination of tenancy.
  • Allow the terms and conditions of lease to be determined mutually by the land owner and the tenant, without any fear on the part of the landowner of losing land rights.
  • Facilitate all tenants including share croppers to access insurance bank credit and bank credit against pledging of expected output.
  • Incentivise tenants to make investment in land improvement and also entitle them to get back the unused value of investment at the time of termination of tenancy.

 

Why it is so special?

The Act will allow leasing of land for the purpose of agriculture and allied activities for a specified period and as per mutual agreement between land owner and lessee cultivators. Agriculture and allied activities encompasses the raising of crops including food and non-food crops, fodder or grass; fruits and vegetables, flowers, any other horticultural crops and plantation; animal husbandry and dairy; poultry farming, stock breeding; fishery; agro-forestry, agro-processing and other related activities by farmers and farmer groups.

Further, the major benefit expected from the Act would be to lessee-cultivators, as they would be entitled to obtain loans, crop insurance, disaster relief or any other related benefits or facilities provided to farmers by the state or Central government based on their agricultural use of the leased-in land.

 

Limitations in the proposed act:

  • The Model Leasing Act, if adopted in the proposed form, may encourage the diversion of agriculture land from crop cultivation to commercial use because it allows leasing of agricultural land for activities like plantation crops, animal husbandry and dairy etc., in addition to crop cultivation. Once agricultural land is transferred to allied activities, it will not only reduce the total land stock available for crop cultivation with an adverse impact on production of field crops but will also change the land-use pattern, if not permanently, at least for a very long period.
  • There is also no clarity on the definition of lessee cultivator. The Model Leasing Act defines a lessee cultivator as a “person who leases in agricultural land.” It is not clear whether corporates and absentee landlords willing to manage cultivation through their employees/representatives can be allowed to lease-in agricultural land or the leasing should be restricted to farmers/group of cultivators including landless cultivators.
  • Whether contract farming, particularly by corporates, should also fall under the purview of the proposed Model Leasing Act. There should not be any problem in leasing of agricultural lands by corporates if land use is restricted to cultivation of agricultural crops only since the leasing-in by corporates may lead to increased flow of investment to the agriculture sector. However, such contracts would affect the food security in the country, if choice of crops is solely motivated by profit.
  • Also worrisome is allowing lease contracts between the parties for an indefinite period and that the government shall not fix a minimum or maximum lease period. It would also increase the risk of any influence/pressure on the lessor to lease out the land for a very long period and it might become very difficult for the survivors in the family to resume operating the land from an influential lessee. Thus, if the government does not fix maximum lease period, it will increase the risk of losing the contracted land permanently from food crops.
  • The Model Leasing Act, though provides for lessors to resume the land if any damage to the soil health is done by the lessee, it does not clearly define what constitutes damage to soil health. It is felt that interpreting the “damage to soil health” would vary from person to person and it may give rise to disputes between the lessors and lessees.
  • The Model Leasing Act also allows lessees to build structures or any fixtures on the land with permission from the lessor. These ambiguous provisions are not any better than the existing system in terms of its provisions to improve security of the tenant. Therefore, in all likelihood it would reduce the incentive for tenants to step up investment and improve land productivity.
  • The Model Leasing Act’s proposed schemata of addressing the issue of change of land ownership, is inimical to the interests of both landlords and tenants. Once the ownership of land is changed on account of sale or gift, lease contract may be terminated unless the new landlord and lessee agree to continue the contract for the rest of the agreed period.
  • The act is also silent on whether a land already under lease agreement can be mortgaged or not, keeping in view that the lessee might be interested in availing crop loans or term loans in case of allied activities.
  • While dealing with termination of lease, the Model Leasing Act has blatantly ignored why lessor should not terminate lease contract if the lessee keeps or intends to keep the contracted land fallow in a normal case due to his loss of interest in cultivation. Keeping a cultivable land fallow defeats the very purpose of enacting the Land Leasing Act which aims at ensuring productive and optimal use of scarce resources.

 

Why is it being opposed by farmer activists?

  • Farmer activists across India have strongly advocated not allowing the usage of agriculture land for industrial purposes.
  • They say agricultural land should not be given to corporate houses in their name. There should be a viable ceiling on land to be given on lease and it should be given only to landless, agriculture labourers or unemployed youths at the household level.
  • The ceiling on land should be such that it can provide a good living for a household. Otherwise, there is a danger of this land being transferred to corporate houses, which can prove disastrous for the food security of this country.
  • Also, activists say grazing lands for animals should not be allowed at any cost to be given on lease in the name of fallow land. Grazing land is very crucial for a village and it should be reserved for livestock only.

 

Conclusion:

Overall, the Model Leasing Act aims to benefit both lessors who prefer to enter into a lease agreement without the fear of losing ownership rights, and lessees who require protection from premature termination of lease contracts. No doubt, legalising the tenancy will result in better productivity of crops grown on the contracted land by replacing an unwilling cultivator with a willing cultivator, provided the contracted land remains to be used for cultivation of field crops only. However, the Model Leasing Act appears to be lopsided and seems to be giving an edge to lessees over the landlords. Also, allowing the contracted land to be used for activities other than crop production that too for an indefinite period will certainly threaten the food security of the country in the long run. These issues should be taken up for further consideration by the NITI Aayog so that a balanced and more acceptable model would come into force.